'This Week' Transcript: Economic Panel

AMANPOUR (voice-over): Good morning. I'm Christiane Amanpour. And
at the top of the news this week, trouble on the road to recovery.
Jobless claims are up.

(UNKNOWN): The numbers are dismal for employment.

AMANPOUR: And Wall Street gets nervous. How worried should we be?
And what will bring confidence back? This morning, top voices on the
economy: former New Jersey Governor and Wall Street CEO Jon Corzine;
Republican Senator Bob Corker of the Senate Banking Committee; Obama
economic adviser Laura Tyson; and chief economist at the U.S. Chamber of

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Commerce, Martin Regalia.

Then, washed away. Twenty million Pakistanis in danger, as the
worst flooding in memory leaves huge areas of the country under water.
It's a race against time to bring relief. "This Week" has the latest
from inside the crisis, with U.S. efforts to deliver aid.

Plus this week, the president weighs in, defending the mosque and
Islamic center near Ground Zero.

OBAMA: Muslims have a right to practice their religion, as everyone
else in this country.

AMANPOUR: Or does he?

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OBAMA: I will not comment on the wisdom of making a decision to put
a mosque there.

AMANPOUR: That and all the week's news and politics on our
roundtable, with Cokie Roberts, political strategist Matthew Dowd, David
Ignatius of the Washington Post, and Chrystia Freeland of Thomson Reuters.

And the Sunday funnies.

LENO: Unemployment among teenagers at an all-time high, all around
the world. It's not just here. In fact, in China, it is so bad, kids
as old as seven are having to move back in with their parents.

(END VIDEO CLIP)

ANNOUNCER: From all across our world to the heart of our nation's
capital, ABC "This Week" with Christiane Amanpour starts now.

AMANPOUR: Good morning. This was supposed to be the summer of
recovery, but the effects of the so-called Great Recession continue to
cloud this nation and much of the world. The number of U.S. workers
seeking unemployment benefits rose unexpectedly to 484,000. It's the
worst in almost six months. And in the housing sector, banks foreclosed
on more than 90,000 properties in July, the second-highest total since
the crisis began.

And these pictures speak to the desperation this week in Atlanta.
Thirty thousand people waited for hours in sweltering heat to apply for
655 available spots of government-subsidized housing.

And I'm joined by four top voices on the economy. From Berkeley,
California, member of the president's Economic Recovery Advisory Board
Laura Tyson. From Chattanooga, Tennessee, Republican Senator Bob Corker
of the Banking Committee. In New York, the former New Jersey governor
and CEO of MF Global, Jon Corzine. And joining us here in Washington,
chief economist for the U.S. Chamber of Commerce, Martin Regalia.

Thank you all for joining me. You've heard the figures. You've
read about the figures. You can also probably palpably feel the concern
and worry amongst the American people. And I want to read you something
that was written about this joblessness, about the younger generation in
the Atlantic recently. Look at what was written about unemployment.

"There is unemployment -- a brief and relatively routine
transitional state that results from the rise and fall of companies in
any economy, and there is unemployment -- chronic, all-consuming. The
former is a necessary lubricant in any engine of economic growth. The
latter is a pestilence that slowly eats away at people, families, and,
if it spreads widely enough, the fabric of society. Indeed, history
suggests that this is perhaps society's most noxious ill."

Let me turn to you right now, Martin Regalia. Do you agree with
that? And do you think that that's what this country is in right now?

REGALIA: Well, I agree with it, and I think that is what we're
seeing right now. We're seeing an economy that is growing, but growing
in a very lackluster way. It's not generating enough demand, and
therefore it's not generating enough jobs.

And on top of that, the last three or four recessions have given
rise to longer terms of unemployment. More retooling is necessary to
bring the displaced workers back into the workforce, and that retooling
is taking a lot longer.

AMANPOUR: Let me turn to you, Laura Tyson. You're an adviser to
the president right now. A recent Wall Street Journal poll of some 53
economists say they don't see the employment rate coming down below 9
percent, you know, at least until June 2011. What can be done about this?

TYSON: Well, I think that we have to do a number of things. I
think we have to worry, first of all, about taking care of the people
who are unemployed. And that's why I really have supported the
extension of unemployment benefits and the extension of benefits to help
people maintain their health insurance if they lose their job, very,
very important. You have to deal with the reality that people are
long-term unemployed, 7 million people long-term unemployed.

Secondly, we have to continue to do everything we can to stimulate
demand in the economy. Let me give you two examples. We do have a
payroll tax credit that has been offered to companies that bring on new
unemployed workers into the workforce. I think we should continue that.

I think we should continue to look at major spending on
infrastructure projects. You know, the good news here about the
stimulus, it's said, well, the infrastructure projects haven't come on
board yet. They're coming on board now, and they have high
job-per-dollar-spent outcomes.

AMANPOUR: All right.

TYSON: And then, finally, we have to worry about the longer-run
problem of this structural employment, because I'm going to point out
one thing for this discussion. The unemployment problem is primarily a
problem for people who have a high school -- who don't have a high
school education or just have a high school education.

Unemployment for those with college educations is now 4.5 percent.
Unemployment for those with more than a college education, below 4
percent. We have a problem of education in this country, and we have to
educate more of our young people fully through college education. Let's
take this as an opportunity to do that.

AMANPOUR: Let me ask Senator Corker on the Banking Committee -- and
you've spoken quite a lot about this -- you are in Chattanooga right
now, and you told me that you have been out in the rural areas, where
there's really nothing for people out there.

You know, beyond -- beyond the current unemployment rate, there's
also underemployment, and it's standing at about 16.5 percent, the total
problem of people who either don't have a job or who don't have enough
of a job to make ends meet. How is it -- is it impacting the people in
the rural areas? And do you think that this really goes to the heart of
the American dream that is being deferred?

CORKER: Well, you know, as we speak, the city that I'm sitting in
has been named one of the -- is named the top economic producer over the
next decade, and it's because of investment in the workforce. It's a
vision. It's the fact that we really have held on to trying to produce
things.

As you go to the rural areas, with the lack of infrastructure that
exists in most rural areas around our country, there's lesser
opportunity for that. And so it does create challenges that don't exist
in some of the major metropolitan areas, and I think we're seeing that
more and more across our country.

At the same time, I think much of what we've done over this last
year is create an air of unpredictability. And what's happening is
businesses are sitting on the sideline. They don't know exactly what
the lay of the land is. And I think the best thing we can do in
Washington at this time is really just to calm down and quit changing
sweeping -- making sweeping changes.

I sat down with a business this week -- I'll give you an example --
and they're looking at the health care bill, and they're trying to
decide, should they keep people under 30 hours? Smaller businesses are
saying, should we stay under 25?

So I think that much of what we've done over this last year has
actually been counterproductive. And, again, the best thing we can do
is just calm down, to really let people's balance sheets sort of get
back where they need to be. That will stimulate demand over time, as
families and people -- households across our country get their balance
sheets in order.

AMANPOUR: Well, we'll come back to that. You know, the Financial
Times has basically said that Congress needs to, quote, "get a grip."
I'm going to ask you about that right after I go to Governor Corzine and
ask him about what is going to stimulate the kind of consumer confidence
that you were just talking about, Senator -- Senator Corker.

Look, there are figures, Governor Corzine, that suggest that
non-financial companies have socked away something like $1.84 trillion
in cash and other assets, but they're not spending them, they're not
hiring, they're not building plants and other infrastructure. Why not?
And wouldn't -- don't they have a responsibility to do so in this situation?

CORZINE: Well, there is a gap of confidence in the economy that
comes from the shock that we had of 2008 and 2009; $17 trillion worth of
lost economic value in that timeframe makes companies and people very,
very concerned. Even though we've had a major recovery in some of that
valuation loss, it makes people nervous.

We also -- and I think your quote that you started with actually
frames what is the real problem. We have both a recession problem that
was the result of the great financial crisis, but we also have this
great transformation that's taking place across the globe. A lot of
other countries are very competitive with the United States today, and
we need to invest in our education system, in our infrastructure system,
in our efforts to expand our exports, if we're going to be competitive
as we go forward.

AMANPOUR: OK, well, let me ask -- let me ask about that, because
when it comes to exports in manufacturing, we read quite a lot that
America has been losing its competitive edge to places like China and --
and -- and other such. Laura, what do you think the United States can
do to regenerate a competitive export in manufacturing?

TYSON: Well, I think the key word Jon raised is investment. And I
think it is absolutely essential. You know, we get caught up in
discussions of deficit reduction or stimulus. Let's forget those issues
for a minute and just think about investment.

And here it is investment in a number of things. I've heard Senator
Corker talk about the importance of infrastructure. For years going
into the Great Recession, it has been noted that the U.S. has been
investing inadequately in its infrastructure, maybe to the tune of $200
billion a year of economically justifiable investment infrastructures
we're not doing.

Let me turn to investment in education. It is the case -- we used
to be number one in the world in college graduation rates. We are now
number 14, number 15. We're leading the world in high school dropout
rates. And as I said, the unemployment problem is most severe in dropouts.

So invest in people. Invest in infrastructure. Invest in
knowledge. You know, we basically are trying to get the research and
development spending in this country up to 3 percent so we can again be
leaders in the world in that. Invest, invest, invest is really what we
must do.

Public-private partnerships, you know, with that, $100 billion of
the stimulus package is levered to private spending. A dollar spent by
the public sector on infrastructure can bring three dollars of private
spending.

REGALIA: Well, I think, you know, our tax laws and our other
regulatory structure in Washington don't foster that. We tax savings
multiple times. We don't allow full cost recovery. We don't allow
expensing on investment. We can't even pass an R&D credit extension
that's been delayed for over a year through a Congress that's fighting
with each other.

And when you don't have the kind of laws and the kind of tax
structure that facilitate and encourage investment, you get a lot less
of it. We tax our multinational corporations on their overseas profit.
We're the only major trading country in the OECD that still does that,
that doesn't have a territorially tax system.

And so what do we do? We tell our people, go out and export, and
then we tell them, we're going to tax you more than every other people
you have to compete with in the global economy.

AMANPOUR: Senator Corker, what about that? We were talking about
Congress, and you just heard Mr. Regalia talking about Congress fighting
with each other and not getting these things done. What do you think
can be done? You said chill out, calm down, perhaps until after the
election. What can be done to fix this, do you think, in a bipartisan way?

CORKER: Well, I think one of the things we need to do -- I've heard
Laura talking about investment -- is as a country, we need to decide,
how much should the federal government spend? On average, it's been
20.3 percent over the last 50 years. I heard Erskine Bowles the other
day say 21 percent. But I think much of our debate goes to little
issues that really divide our country, but that needs to be the first
issue. How much should the federal government take in from the private
sector?

Once that decision is made -- I might say 18 percent. Erskine may
say 21 percent. Maybe the right number is someplace in between. But
after that decision is made, what is the appropriate tax policy to
generate economic growth?

And I think that some comments have been made about our lack of --
the way we tax. We do tax investment. We encourage people to go into
debt. I think our tax policy in this country certainly needs to be
looked at, and it needs to be looked at in a way to encourage
investment, to encourage growth.

Obviously, if our gross domestic product grows, then the whole issue
of debt diminishes, the kind of things that Laura's talking about are
more able to be done. So I think we -- we need to move to that big
picture first, look at what's appropriate. I think most people in
America would rather determine what to do with their own money versus
let 535 people decide for them.

But the fact is that -- that we get mired down in these little
issues that divide us when really we ought to focus as a country on this
bigger issue first.

AMANPOUR: So let me go to you, Governor Corzine. You lost an
election -- re-election in your state when you were governor. When you
took office, unemployment was at 4.7 percent. When you left, it was 9.9
percent. Is that why you lost? And you've talked about how it was
painful, but in 20/20 hindsight, what could you have learnt from that,
do you think?

CORZINE: Well, I think that any time the economy is weak,
incumbents are going to have challenging re-election on most instances,
and that certainly was the case when you have unemployment rise that
much. We were in the midst of the financial meltdown and the
aftershocks of that in 2009. I think we'll see some of that this fall.

But I want to go back to, we have been successful in this country in
driving investment with higher tax rates than what we have today. I
think the issue about setting those and making sure that the expiring
tax cuts that are actually on the table at the end of this year, that
needs to get addressed, and it needs to get addressed relatively
quickly, because that does create uncertainty while that is yet to be
resolved.

I would hope that the Congress and the president would either say,
"We're going to get to a conclusion about the long term," or, "We're
going to extend this for a year and we'll come back and debate this at
another point in time," because that's a major uncertainty overhanging
the economy.

AMANPOUR: Let me...

CORZINE: In the long run, though, we overemphasize taxes relative
to the general confidence and the well-being of our middle class. That
comes together, and you'll see it in the elections. If you have that
high unemployment rate extending over a period of time, people are going
to be mighty unhappy, and they're going to take it out on both Democrats
and Republicans.

AMANPOUR: Let me just quickly go to what you've mentioned about
being competitive with the rest of the world. The big story out of
Europe this weekend is that Germany has shown a stronger-than-expected
growth over the last quarter.

Laura, you were saying something about how Germany had -- had taught
and trained its workforce to compete in these situations.

TYSON: Right. Well, Germany has had a long-term commitment to
manufacturing. And it has a very strong manufacturing base. It has a
much larger share of its economy in manufacturing than we do.

A major part of that is (inaudible) serious vocational training and
very serious ongoing training for manufacturing workers in Germany. And
oftentimes a German firm with German workers will retrain and use
technology at home rather than offshore those jobs abroad.

AMANPOUR: All right.

TYSON: And I want to point out, also, that Germany manages to do
this with a much higher tax rate than we do. I think there should be
corporate tax reform. I agree with what -- a lot of what Senator Corker
and Martin Regalia have said, but we need investment.

And I would say, in thinking about the share of government and GDP,
something that the senator mentioned, we need to distinguish between
investment spending by the government -- whether it's federal, state or
local -- and other spending.

AMANPOUR: OK.

TYSON: A dollar spent for infrastructure is different than a dollar
spent for current operations of government.

AMANPOUR: All right. We've got about 30 seconds left. I want to
know, do you think, Martin Regalia -- and then Senator Corker -- can
some confidence be injected into the American consumer anytime soon?

REGALIA: Yes, I think it can. I think one thing that we have to
address right away is, what's going to happen at the end of the year
with the 2001 and 2003 tax cuts? There ought to be an extension, at
least a temporary extension, and that would help to -- to ease both the
consumers' fears and the business fears.

AMANPOUR: Senator Corker, 15 seconds.

CORKER: Yes, I agree with that. Let's -- let's leave tax policy as
it is. Mark Zandi had a great piece today in the New York Times saying
the same. Let's not fiddle any more. Let's leave it -- let's leave
things so they're predictable and deal with -- deal with this down the road.

AMANPOUR: Well, we'll see how that plays out ahead of the elections
and afterwards. Thank you all for joining us on this important topic.

CORKER: Thank you.

AMANPOUR: And we turn now to Pakistan, a major U.S. ally, where a
major humanitarian crisis in its third week. Pakistan's government says
the worst flooding in that nation's history has left 20 million people
homeless. U.S. military helicopters are providing a lifeline for many
there, but the U.N. says that 6 million people are in need of food,
water and shelter.

ABC's Jim Sciutto flew into Pakistan's Swat Valley with a U.S. Army
relief mission.

(BEGIN VIDEOTAPE)

SCIUTTO (voice-over): From the air, the scale of the disaster is
alarming, rivers swollen miles beyond their banks, behind them, a trail
of destruction.

(UNKNOWN): I've never seen such a large area receive as much damage
as I have seen in Swat.

SCIUTTO: Flying into the hard-hit Swat Valley aboard U.S. Army
relief helicopters, we saw every single bridge destroyed, and on the
ground, villages now dependent on aid from the air.

In Bahrain, population 40,000, its once waterfront hotels now in the
water. It has no power, no clean water, and no roads in or out.

(on-screen): So it's cut on both sides?

(UNKNOWN): Yes, it's gone on both sides.

SCIUTTO: So this is -- this is an island now?

(UNKNOWN): (OFF-MIKE) is an island.

SCIUTTO: These American helicopters are ferrying supplies from
bases like this one to villages that are completely cut off. We're
seeing rice and flour and other supplies going in. The helicopters are
today their only lifeline.

(voice-over): Food, much of it from the U.S., in, refugees out.
For the fight crews diverted to relief from combat in Afghanistan, it is
a dramatic shift.

(UNKNOWN): I sat down and spoke to all the troops about turning
that switch off. But the first time I looked at those children needing
help, I was no longer concerned.

SCIUTTO: U.S. and Pakistani relief teams are fighting against the
clock. This weekend, the first confirmed cases of cholera, a
potentially deadly disease that's the result of the lack of clean
drinking water.

For many Pakistanis, the flooding and its aftermath is a gritty
reminder of all the ways the government has failed them, a plodding
response, a state budget dependent on fallen loans, shoddy
infrastructure. Seeking to take advantage of the chaos, the Taliban is
delivering help where the government is not, particularly in Swat, which
saw the end of a massive anti-militant offensive just weeks ago.

For the U.S., however, one sign of hope. America is deeply
unpopular here, but the relief effort is winning hearts and minds.
Among them, the mayor of Bahrain, who told me the U.S. is outdoing
Pakistan's Muslim allies.

(UNKNOWN): And in this disaster, the Islamic countries give their
aid after America.

SCIUTTO (on-screen): Does that surprise you?

(UNKNOWN): Yes, surprise, surprise.

SCIUTTO: A good surprise?

(UNKNOWN): Good surprise, yes.

(END VIDEOTAPE)

SCIUTTO: The first priority of the American relief effort is to
help the millions in need, but U.S. officials will say very openly it's
also intended to improve America's dismal image here. Sixty-eight
percent of Pakistanis view the U.S. negatively, and the sight of those
American helicopters a very tangible form of outreach.

And, Christiane, on a lot of that food going in, we've seen them
labeled very prominently with American flags.

AMANPOUR: Jim, indeed. Let's just talk a little bit more about
that, because you mentioned the disapproval rate because of the drone
strikes, because of going after terrorists that kill quite a lot of
civilians. How are you noticing that in these areas Americans are
actually being received warmly because of this aid?

SCIUTTO: Well, we see them getting hugged. They're getting kisses
literally on the ground from these troops and thanks, gratitude for this
aid that they're in desperate need of.

That said, nationally, the Pakistani media is not covering the U.S.
relief effort very closely. They're focusing -- perhaps not
surprisingly -- on the Pakistani relief effort. And in a sign of the
sensitivity of simply being associated with the U.S., the U.S. will not
identify local Pakistani NGOs that it's giving aid to so it doesn't open
up the risk that they're subject -- that they're targeted for terror
attacks.

AMANPOUR: And, Jim, very quickly, the Pakistani troops, are they
being diverted from fighting the militants?

SCIUTTO: Well, there are 50,000 Pakistani troops involved in this
relief effort. Pakistani officials say that none of them have been
diverted from the border or from counterterror operations. And U.S.
officials that we've spoken to today say they believe those
reassurances. And they say, Christiane, that counterterror operations
with the Pakistanis are underway as we speak.

AMANPOUR: Jim, thanks so much, from Islamabad.

And in response to my questions on the disaster, you can see
comments from U.S. Special Representative to Afghanistan and Pakistan
Richard Holbrooke on our Web site at abcnews.com/thisweek.

And coming up next, the president's decision to weigh in on the
controversial Islamic center near Ground Zero on our roundtable with
Cokie Roberts, Matthew Dowd, David Ignatius, and Chrystia Freeland.

(UNKNOWN): How is that healing, by building a mosque, an
in-your-face mosque at Ground Zero?

(UNKNOWN): It's like spraying swastikas all over a Jewish memorial.

BLOOMBERG: We would be untrue to the best part of ourselves and who
we are as New Yorkers and Americans if we said no to a mosque in lower
Manhattan.

KING: This is such a sensitive issue. This, to me, is such a wrong
place to have a mosque such as this.

OBAMA: I believe that Muslims have the right to practice their
religion, as everyone else in this country. That includes the right to
build a place of worship and a community center on private property in
lower Manhattan in accordance with local laws and ordinances.

(END VIDEO CLIP)

AMANPOUR: The president waded into the controversy over the Islamic
center near Ground Zero, one of the topics that we'll be discussing this
morning in our roundtable, with political strategist Matthew Dowd,
Chrystia Freeland of Thomson Reuters, David Ignatius of the Washington
Post, and our own Cokie Roberts. George Will is still on vacation.

Thank you all for joining us. You did see that speech by the
president on Friday night at the Iftar Ramadan dinner at the White
House. Why do you think he said that then?

ROBERTS: I think he said that then because he actually believes
that, but the real question is, why that he didn't say the next day
something more? Do you want to talk about that?

AMANPOUR: Yes, we do, because we're going to put up some poll
numbers and just show everybody what the poll numbers are on this
issue. One poll says, when they ask about what people think about the
plan to build the mosque, that only 30 percent say it's appropriate and
64 percent say it's wrong, but when they say do the Muslim group have a
right to build the mosque, 61 percent say yes and 34 percent say no.

So I guess, is that, do you think, what caused the backtracking?
Although those poll numbers were out before the speech on Friday night.
Listen to what the president said in the gulf in Florida on Saturday,
yesterday.

(BEGIN VIDEO CLIP)

OBAMA: I was not commenting and I will not comment on the wisdom of
making a decision to put a mosque there. I was commenting very
specifically on the right that people have that dates back to our
founding. That's what our country is about.

(END VIDEO CLIP)

ROBERTS: That's really not what he was doing. I mean, if you
listen -- as you played the whole first part of what he said -- he said
they have a right to build on private property, all of that, and --
granted, he didn't say it's wise to build on private property, but it
was very clearly an endorsement. And then to walk back from it is just
so silly. He's already taken all the flack for having said it.

DOWD: I think they figured out this is a real political problem
they have. And I think they either had a tin ear at the beginning of
this and how it was going to come across or they mishandled it totally
from the beginning, because if they understood, I think, the public on
this, where two-thirds of the public say they have a right but
two-thirds of the public say don't do it, he would have given a speech
going directly to those points, instead of saying -- one day saying they
have the right and the next day saying I didn't necessarily say it was
the right thing to do.

I think this is a big problem for the president, because it feeds a
broader narrative about him, which is, it's my way or the highway. In
many ways, to me, it reminds me of Bush, which is, is, "I don't care
where the American public is on this. I'm going to say what I think is
the right thing to do."

He did on -- he's done it on immigration in Arizona. He's done it
on this. He's done it on health care. I think that's the political
problem...

(CROSSTALK)

IGNATIUS: ... problem for him. I thought that the speech Friday
night was a model of political courage, in the sense that he said what
he believed knowing that it was going to cost him. The White House has
stayed out of this issue knowing that it's political poison, and I think
the president spoke to it fairly directly. This is America. People
have a right to build on property that they own, even if it's going to
be a mosque near Ground Zero.

He said -- I was sort of sorry that he was trying to walk it back in
these more nuanced comments yesterday.

FREELAND: I totally agree with David. And I think, you know, Matt,
too, the point of my way or the highway, another way of talking about
that is leadership, conviction, having your beliefs, and not governing
according to polls.

And I think if you asked most Americans, what kind of a leader do
you want, if you ask people in the world what kind of a leader, you want
someone who governs according to conviction.

And I do think this touches on, Christiane, the economic panel that
you had earlier. I think that it touches on it in two important ways.
This point about private property might seem like a parsing, but it is
actually essential.

And I think to have the president -- and we had similar comments
from Mike Bloomberg coming out and saying, actually, we believe that the
rights of private property are so strong, we are not going to change
them because -- because...

(CROSSTALK)

AMANPOUR: But there are two issues, Cokie. Where does this go from
now? I mean, where does it actually go? Is this now a line drawn under
it?

ROBERTS: No.

AMANPOUR: Is this...

ROBERTS: No, I think that...

(CROSSTALK)

AMANPOUR: ... to get built?

ROBERTS: Well, that's -- that's an issue that I certainly can't
answer, but I -- my guess is, eventually it does get built and that it
becomes no problem.

But the -- but the political issue will continue, because even
though the president's remarks Friday night started a firestorm, I think
the backtracking is even worse, because, you know, you can make a case
that what he said Friday night is just a matter of fact, it is an
American right, but to keep -- to keep saying, well, now I'm not sure
about this, and then what tomorrow is like...

(CROSSTALK)

AMANPOUR: ... I just want to ask you, because it does go to the
heart of what he's been doing since the beginning of his presidency,
reaching out to the -- not just the Muslim world, but to Muslims in
general. And he made a very important first interview, where he said
the United States could not afford to have yet another generation of
Muslims viewing it as the enemy.

So do you think it's wise to have this huge hubbub over it or it
should just go forward, this mosque?

DOWD: Well, he would -- the president would like this to sort of
just go away and not have a huge hubbub about this. The problem is, is
that two-thirds of the country are opposed to him on this. That's a
problem for a president of the United States.

I think he is in totally -- he states what's in the Constitution.
They have a right to build it. That's not the point in this. That is
not the point in this. You have a right for free speech. It doesn't
mean that you can go and like yell...

(CROSSTALK)

IGNATIUS: Standing up for free speech for Muslims is -- is a point
in this climate.

FREELAND: Where is that not the point?

DOWD: But it -- it -- the point is, is that you have to build
consensus on this. Tolerance goes two ways. Tolerance goes two ways.
Tolerance is the tolerance to somebody to build on private property what
they want, but tolerance also is to recognize what that symbolically
says to a whole bunch of people in this country. And if you don't
recognize that, you're going to have this kind of furor.

AMANPOUR: Do you think it should go ahead?

DOWD: Do I think it should go ahead? No. I think he should call
together the people -- there's many Muslims and many people in the Arab
community that are very worried about this happening, actually, that
they voiced in there.

I think he or somebody should call together something, put this on
hold for a little while, bring together some consensus about what people
should do, because right now, it's white hot.

AMANPOUR: But what do you do then? It is white hot -- you're
absolutely right -- right now. But what do you do when the actual
owners, the people who want to build this are in the moderate stream of
Muslims, did go to the White House? You were there when they did, when
-- when this gentleman did, condemned 9/11, condemned extremism,
condemned terrorism, and now they're faced with this situation?

ROBERTS: Well, there are -- there are ways always of making these
situations just less hot. And it is a question of suggesting other
places, providing other places. Those kinds of things can always be
worked out.

FREELAND: But let's talk a little bit about the rest of the world.
You know, I think that actually the president's comments, the comments
by Mike Bloomberg are a really important message to the Muslim world.
And we're going to be talking about Pakistan later on. For these
people, for American leaders to say, in the space of, you know, some
political pressure from their voters, to say, actually, we believe
sufficiently strongly in diversity, in private property rights for our
American citizens, I think that's a great...

(CROSSTALK)

IGNATIUS: ... our strongest -- our strongest suits.

ROBERTS: ... coming back from it is the problem.

IGNATIUS: As the world looks at us, if they see that the United
States -- even in -- you know, an issue that hurts -- and Ground Zero
hurts -- even on that issue, we still stand up for the freedom of people
to dispose of their property as they want, that does count.

When I travel, you travel, Christiane, you know, we hear comments
about that America a lot. And I think you shouldn't minimize the
benefits of -- of saying to moderate Muslims, "Here you are. This
upsets a lot of Americans, but we're"...

(CROSSTALK)

FREELAND: ... if the people you're being tolerant of...

(CROSSTALK)

DOWD: There's two freedoms in conflict here. There's two freedoms
in conflict. There's the freedom to build on your private property and
then the freedom for people to protest and say this is not what we want.

IGNATIUS: Understood.

DOWD: I think the president obviously has to lead in this country
and lead in the world. The problem with this one is he is speaking from
a position of weakness, not a position of strength. And so if he does
not have consensus...

AMANPOUR: Why do you say that?

DOWD: He is in a total position -- his approval numbers in this
country are in the low 40s. He's perceived as not able to handle all
the major issues in this country right now. The vast majority of this
country right now questions his leadership.

For him to go out on an issue like this that is white hot and then
say, "I'm going to say it, and I'm going to lead the rest of the world,"
while two-thirds of this country is in another place, is a real problem
for him.

AMANPOUR: So, clearly, the consensus appears that it should have
been arranged, debated, done in a slightly better way between those who
wanted to actually build it and the community, whether they're Jewish
members of the community, Christians, or other Muslims.

And one of the tragedies seems to me that the actual imam was
talking -- and his wife -- to the -- to the people who put up the Jewish
community center in New York and was talking about how to have something
similar like that. And it seems to have all gone awry.

Let's move on to politics, because this week was also -- and this is
(inaudible) was primary week in -- in -- in many states. Some have said
a group of sort of -- political playbook said oddball character is
coming out of right field. What -- whether you believe or agree with
that or not -- do you think is the effect of those who've won in some
areas, the Tea Party candidates, those who supported?

DOWD: Well, it's interesting. ABC, I think over the last couple of
months, has done a great job of sort of gauging the frustration that
exists in this country, and it's high as it was in 1992, as high as it's
been in 2008. It's not just limited to Republicans. It's independents
and some Democrats in this.

I think these primaries have shown that there are some places where
it's real anger that's related to frustration and then it's other places
which a majority (ph) which is related to frustration.

I think the Republican Party right now, it is the comparison between
a bonfire there and a campfire in the Democratic primary. So you can
handle the campfire, but the bonfire, which is what helped elect Tea
Party people and what's gone on across just headed into November.

I think this is perilous for both parties, actually. I think it's
perilous for the Republicans if they become the Tea Party folks, which
are sort of out of the mainstream and are going to have a hard time
winning November elections, but it's also perilous, I think, for the
Democrats if they ignore this level of frustration and they don't deal
with it.

ROBERTS: That's right. They -- now, they've had plenty of time to
learn about it, and they've had town meetings and heard about it and all
that, so they're not going to be taken by surprise. But they think that
they can just go back to the old playbook, so they're pulling out Social
Security, and they're running against George Bush, and they're doing
things that have worked for them in the past that I'm not at all sure
will work for them this year, and that could be a real problem, because
they're not understanding the level of frustration.

IGNATIUS: The Democrats sound this year with this president like
the party of the establishment. And we have a political firestorm out
in the country. People are really angry. They're angry at Washington.
They're angry about the economy. The Tea Party is an expression of
that, but what Robert Gibbs, the president's press secretary, was
calling the professional left is another example of that, people who
just are angry at the mainstream, centrist views the president often has
been espousing.

And I think that's a real problem for them. They don't have the
energy. They're not tapping into this energy source as they head
towards the elections.

FREELAND: Well, doesn't it just all come down to the economy?

ROBERTS: Well, sure. Sure.

FREELAND: I mean, you know, I don't want to be too simplistic, but
with unemployment at nearly 10 percent, I thought the comments that Jon
Corzine made earlier were right on, that this is a double whammy, this
is a recession following a financial crisis, and this is also the final
act of America's structural adjustment to globalization and the
technology revolution.

That's a really big deal. And I think the real problem is not --
you know, we're going to be focused a lot on messaging and cosmetics
ahead of the midterms. The real question is, can an American political
party or political movement come up with a powerful economic plan, and
one that is maybe really different?

And we're seeing that happen in other countries. Look at Britain.
David Cameron's Tories won with a really radical plan, and they got
actually...

(CROSSTALK)

IGNATIUS: ... just doesn't work. I mean, it's not like they didn't
have a plan.

DOWD: Republicans don't really have to come up with anything over
the next 90 days.

ROBERTS: No, that's right.

DOWD: They're going to win a huge amount of seats in the House, a
huge amount of seats in the Senate. They're going to win a bunch of
governors' races.

To me, the economy is representative of a bigger issue that's out
there. I agree the economy is the number-one issue. The problem is, is
people out there do not think Washington is listening to them. They
don't think they're paying attention to what's going on in America.

And the reason why the economy is so -- has so much anger in it is
because people don't think they're being empathetic with where they are
in their life. And that's, I think, a problem.

ROBERTS: But they're also -- you know, the voters were also very
ambivalent themselves, because on the one hand, the furious...

(CROSSTALK)

ROBERTS: Right, exactly. They're furious with Washington for being
furious and for everybody fighting with each other and why doesn't
anything work, and yet they're furious and feed into that partisanship
tremendously so that there's no right answer for the politicians as they
go to face the voters.

AMANPOUR: But also these primaries this week, the White House and
Democrats were saying that it's not such a bad bag. We (inaudible)
comfort from some of the results there.

ROBERTS: Well, because they were able to re-nominate Michael Bennet
in Colorado, and that made them feel good, because they had backed him.
But, you know, Newt Gingrich had backed Nathan Deal in Georgia, too, and
he won against Sarah Palin's candidate. So, you know...

(CROSSTALK)

AMANPOUR: What does that say about the sort of star of the Tea
Party movement?

DOWD: Well, I mean, endorsements always to me are questionable
anyway, because the voters ultimately make the decision. I think still
Sarah Palin -- Sarah Palin on the Republican side has the most energy
and emotion and passion behind her than any other candidate. She can
still walk into a city and get 3,000, 5,000 people. No one can do
that. So she can have that emotionally. She can charge that, and
ultimately it's about her.

I think the interesting thing on the results is that, there's this
big wave coming into Washington, and Democrats have a seawall. And
what's happened now is Republicans have nominated people that may not be
able to win. And so basically the Republicans are putting bricks on top
of the seawall and building it higher, that they're going to have less
chance of winning in this election because of who they've nominated in
some of these places.

IGNATIUS: You know, their biggest problem would be...

ROBERTS: Working on that seawall.

IGNATIUS: ... I suspect, if they -- if they did win. Suppose the
Republicans did win control of the House and the Senate. What would
they do? What would their program be? You know, they'd be a much
easier mark for the Democrats heading toward the 2012 presidential
election. You almost think it would be better for Obama...

(CROSSTALK)

ROBERTS: Well, of course it would be better for Obama.

FREELAND: You can try to triangulate...

(CROSSTALK)

DOWD: ... 2012 if the Republicans took one of the branches, because
they could either do one of two things which would be beneficial to
him. He could compromise and then show him, he's going to build
bridges, or he could just say, "They're the problem, they're the problem."

The fear I think the White House has is he's going to get the worst
possible result, which is a small margin in the House, a small margin in
the Senate, he can't get anything done, but he owns all the levers of
government...

(CROSSTALK)

AMANPOUR: So now that we've settled that one, let's move right out
of the country to Pakistan briefly, because we did talk about it with
Jim Sciutto, but it's been likened to their Katrina. The U.S. is doing
the right thing sending relief, right?

ROBERTS: Yes, sure.

DOWD: Yes, absolutely.

AMANPOUR: Politically, economically.

ROBERTS: Absolutely.

AMANPOUR: How...

ROBERTS: Humanitarian.

AMANPOUR: Humanitarian, of course...

FREELAND: Strategically.

AMANPOUR: Exactly. What do you think, though, when you look at
this, here's the fight, here's Pakistan nuclear-armed, here's Pakistan
having done the right thing, to an extent, having sent its army after
the militants, and all of that, all of that just about being washed away
literally.

IGNATIUS: Here -- Christiane, here's a country on the edge, a
country that's $11 billion in debt to the IMF, barely staggering along,
that's fighting an insurgency at home, and all of a sudden, pow, it gets
hit with this terrible flood. The latest Pakistani estimate is that
there are 20 million people who are affected in the country.

And the question that people are beginning to raise is, is the flood
going to be the final additional thing that pushes Pakistan into being a
failed state? The army is going to have to focus on rebuilding roads,
getting food to people -- I mean the Pakistani army here, hopefully with
help from the U.S. military -- but that means they won't be able to
fight the Taliban.

I was expecting that there would be an offensive in North Waziristan
against the Taliban and Al Qaida this fall. I was even going to go look
-- go travel with the Pakistani troops. I have a feeling now the
military will be too busy, and that's just one sign...

(CROSSTALK)

ROBERTS: Maybe it doesn't matter, though. Maybe -- maybe the fact
is -- I mean, this is -- this is wishful thinking -- but maybe the fact
is, is having all of this aid come in from the West -- and particularly
from the United States -- and it is our military...

DOWD: Almost solely from the United States.

ROBERTS: ... also -- right, and it's -- and it's not just our
military. It's USAID and all of our humanitarian organizations. I work
with Save the Children there, and we've been in Pakistan for 30 years
and doing this kind of work. Seeing that is more important than saying
we can build a mosque in Manhattan, in terms of dealing with the Muslim
world.

FREELAND: Well, that presupposes that the aid is effective. And I
think to David's point, the other danger -- it's not just that the
Pakistani army is not in a position now to go on the offensive against
the Taliban. I think the real danger here is that you find the local
Islamic organizations, extremist Islamic organizations turning out to be
more effective at helping...

(CROSSTALK)

IGNATIUS: ... a lot of people angry...

(CROSSTALK)

FREELAND: I think that -- I think that...

(CROSSTALK)

FREELAND: ... why Western support, particularly U.S. support, is so
important right now. You know, U.S. policy has to try hard to make the
Pakistanis feel it is not purely a utilitarian relationship, it's not
just transactional, that America cares about Pakistan, not just because
of its relationship with Afghanistan and the Taliban.

(UNKNOWN): Well, the only reason why we're in Pakistan is because
it is transactional.

FREELAND: Yes, so -- so...

(UNKNOWN): And it's vital.

(CROSSTALK)

(UNKNOWN): ... it's vital to our interests and to the interests of
the world.

(CROSSTALK)

FREELAND: ... works, because Pakistani...

(CROSSTALK)

AMANPOUR: And we barely have any time left, but 30 seconds to talk
about Russia about to put the nuclear fuel into the Bushehr plant in
southern Iran.

IGNATIUS: If you wanted one more piece of bad news this week for
the Obama administration, it would be that Russia, which has really been
very cooperative on Iran, which has joined us in U.N. sanctions that
have been tougher than people expected, has decided that it's going to
ship -- next week it's going to begin to operationalize a nuclear
reactor in Iran, a civilian nuclear reactor that generates power. And,
you know, that's the last thing this administration would have wanted.

AMANPOUR: On that note -- on that note, the roundtable continues in
the green room at abcnews.com/thisweek, where you can also find our fact
checks, in conjunction with PolitiFact.

Also on our Web site now, dramatic images from Russia this week,
where wildfires have ravaged that country. Choking smoke from the fires
and record high temperatures have led to hundreds of deaths in Moscow,
and the drought has destroyed a quarter of Russia's grain crops. It's
now banned exports, causing price spikes, and raising concerns of a
global food crisis in the fall.